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Business Comment

David Prosser: Now it's time to stamp out corruption and bribery for good

Outlook No doubt groups such as the Campaign Against Arms Trade and The Corner House will be disappointed byyesterday's sentencing of BAE for offences connected to its sale of a radar system to Tanzania more than 10 years ago. They had called on Mr Justice Bean to reject the plea bargain BAE had agreed with the Serious Fraud Office (SFO) on the affair, which specifically clears the defence company of allegations of corruption. That he did not do so, instead fining BAE £500,000 for accounting failures, will have upset anti-corruption campaigners.

The difficulty, however, is that while even the judge raisedconcerns about the fishy payments BAE accepts it made to a middleman in the Tanzania deal, there was no evidence with which to build a case against the company for more serious offences. The question for the SFO, then, was whether to risk looking supine by charging BAE with what was a minor offence in the context of what appears to everyone else to have been a much bigger stink.

In many ways, it is to the SFO's credit that it accepted the risk of losing face. Campaigners against corruption may not like the plea-bargain system, but in this case it has at least enabled prosecutors to secure a conviction against BAE – as well as £30m of compensation for the people of Tanzania, who were the ultimate victims of this sorry affair.

Why couldn't the SFO build a more serious case? The answer lies in the corruption laws in place at the time of the Tanzania deal. To accuse BAE of corruption, the SFO would have to have been able to show that someone very senior at the company – probably at board level – had been closely involved with the affair. It had no evidence to prove that this was indeed the case.

Speaking more generally, that burden of proof would be exceptionally tough to achieve in almost any case. Companies whose staff have been caught out paying bribes have always been able to paint such individuals as rogue operators, while maintaining their own innocence.

Fortunately, the law has now changed. From April, accusations of corporate corruption will have to clear a significantly lowerhurdle. Where an employee or agent of a company is shown to have paid a bribe, the company will be guilty too, unless it can show it had proper procedures in place to prevent such corruption, which the individual in question had to take extraordinary measures to circumvent.

It is a welcome reform, but until the law takes effect, critics of the SFO ought to hold their fire. For now, the agency is doing its best to prosecute corruption cases, but has one hand tied behind its back. The proof of its ability to fight corruption will be how many successful cases it manages to bring once it has the new law in its armoury.